As the UK Government is heading towards setting up a Renewable Heat Incentive, a Government commissioned study has significantly revised upwards the renewable heat potential offered by heat pumps. The document maintains that most renewable heat at low cost could come from the industrial and commercial/public sectors.

Research results aiming to improve the evidence base for developing the renewable heat incentive (RHI) have now been published. The UK Department of Energy and Climate Change has commissioned NERA Economic Consulting and AEA Technology to investigate how much renewable heat may be achievable under different scenarios, and at what cost in the UK. At the same time, the UK Government last week published its “UK Low Carbon Transition Plan”, according to which the Renewable Heat Incentive (RHI) will be introduced from April 2011.

NERA study finds increased role for heat pumps and the non-residential sector

The UK supply curve for renewable heat was constructed using a financial model of heat technologies that drew on, but also went beyond, previous work conducted for Government. The technologies covered include air-source and ground-source heat pumps, biomass individual boilers and district heating, biogas heat-only combustion and injection to the gas grid, and solar thermal.

Overall there appears to be significant potential for renewable heat to supply much of the market that currently is served by fossil fuels or electric heating. A mix of technologies is likely to be required to meet the share of renewables in heat required for the UK’s renewable energy commitments. The headline findings of the study include:

• Heat pumps offer significant potential: Heat pumps and biomass boilers offer significant potential, in some cases at relatively low cost, while the unit cost of solar thermal was found to significantly exceed that of other renewable heat technologies. The findings differ from previous research, which ascribed a smaller role to heat pumps, and a larger role to solar thermal and heat-only biogas because of constraints on other technologies.
   
• The industrial and commercial / public sectors generally offer lower-cost opportunities: depending on growth rates, the non-domestic sectors may be able to deliver most of the renewable heat required. This finding also differs from previous work, which indicated a higher contribution from the domestic sector instead.

• Most important constraint to mass-market adoption of renewable heat is likely to be on the supply-side: high uncertainty with regards to the rate at which supply capacity for renewable heat technologies can grow will have a significant impact on the costs of delivering a specific share of renewable heat. The study indicates that, with sufficient subsidy, there is no limitation to demand-side potential to prevent a mass-market adoption of renewable heat. The most important constraint therefore may be on the supply-side

UK Government to introduce a Renewable Heat Incentive from April 2011

The study is published at the same time as the UK government publicised its UK Low Carbon Transition Plan, a comprehensive plan to move the UK onto a permanent low carbon footing and to maximise economic opportunities, growth and jobs. The document plots out how the UK will meet the cut in emissions set out in the budget of 34% on 1990 levels by 2020. According to the document, a new Renewable Heat Incentive (RHI) that will significantly ramp up the level of support will be available from April 2011. This will provide households, communities and businesses with payment for getting their heat from renewable sources. The scheme will cover industrial through to domestic scale heat production.

Next steps

NERA Economic Consulting is inviting comments to the study until 14 August 2009. Comments may be sent at the following address: UK_Renewable_Heat@nera.com

As mentioned in the UK Low Carbon Transition Plan, the UK Government will consult on the detailed design of the Renewable Heat Incentive later this year.

This entry was posted on Monday, August 10th, 2009 at 12:31 pm and is filed under Renewable Energy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.